Archive for the 'GBIC' Category

Malcolm Gladwell took the concept of “The Tipping Point” out of the realm of epidemiologists and made it a must know phrase with his book by the same title.  Mr. Gladwell sought to describe the underlying factors that can make large impacts on social phenomenon; comparing fashion trends to disease epidemics in their often sudden rate of impact and ubiquitous presence.  The tipping point that Mr. Gladwell is fascinated by is not a new concept, but the depth of analysis presented in back-of-the-napkin format made his bestseller its own cultural epidemic.

In Vermont, employers have been trying to describe our current challenges as their own kind of tipping point.  The challenge is that you’re never quite sure where or when the tipping point will come into play.  For the state, we can see challenges looming: the bankrupting of our unemployment fund clearly shows a broken link in our social support system and our state deficit is currently on the frontlines as a target of concern, but whether or not (or when) one of these or the other will actually lead to a rapid decline in our socioeconomic sustainability is not known.  Within the business community, this discussion can be heard through the quiet comment of “death by a thousand cuts.”  It’s often a challenge to pinpoint that single thing that could cause a company to close its doors, either permanently or to complete a move to another state with perceived higher return on investment, however, we know that for every individual employer that limit exists.

It is often argued that small changes and tweaks to our tax rates, regulatory system, and other associated business costs have not made a dramatic impact on the number of high-wealth individuals in the state or on the overall composition of our economy.  And while this might have some historical validity, it fails to consider any sort of limit on when a slow trickle turns into a broken dam.  Yet these are things that are repeated as challenges on par with healthcare reform, economic competitiveness and power supply quality and rates.  The important thing to remember is that for each of these factors, there is an equal opportunity to effect positive change.  The movement towards a cultural epidemic should ignite a sense of opportunity as much as one of concern.

Part of the challenge is finding those factors, the “agents of change,” that can catalyze rapid restructuring.  The goal is to find and support those factors that can rapidly add value to a system that is otherwise in equilibrium.  We often think of these actions as revitalization of existing resources or in the creation of new assets with broad value.  An example might be the factors behind the expansion and renovation of the Dealer.com technology campus on Pine St.  The 300 person expansion is being heralded as a focal point of a growing technology community in the South End of Burlington that includes other Vermont employers such as Google analytics experts EpikOne.

Critical in the decision making process for that single employer was the value, both real and perceived, of the state’s three premier economic programs: the Vermont Employer Growth Incentive, low finance rate money from the Vermont Economic Development Authority, and the Vermont Training Program.  Dealer.com met their positive tipping point and decided to grow employment in our state 100%.  What we need is to promote a cultural shift that sees strength in retention of employers and increased growth in the addition of new companies, both from Vermont entrepreneurs and from out of state employers looking to be a part of our economy.  Governor-Elect Shumlin has been open about the fact that he has asked every one of his appointees what they will do to create jobs under their purview.  The question is the right one to ask; what we need is the support, vision and strength of implementation to ensure that we tip the scales towards growth of our value-adding employers – without strong action, we stand to tip in the other direction.

As an organization chiefly concerned with aiding in economic development for Chittenden Country, GBIC often speaks with Vermont employers to figure out what helped encourage them to set up their business in our state. Our goal is that if we can find a common denominator to support, it will encourage other potential employers and entrepreneurs to choose to do the same. Yet after hearing of the many positives that make Vermont a great choice, what often comes out is that choosing to do business in Vermont sometimes is in part a decision made with the heart and not with the head (or at least not without rationalizing with your accountant). Every employer understands the cost environment in which they are establishing their business when the decision is made to take the risk of opening their doors. However, as Vermont continues to increase both real taxation rates and new areas of taxation, there is growing concern that little seems to be done to encourage the expansion of Vermont’s tax base, rather than simply drawing more from the same wells.

What is abundantly clear is many Vermont entrepreneurs and employers have such a genuine love for Vermont that initially deters them from seeking locations outside of our borders. The problem, as has been seen with some of the most successful Vermont companies, is that with success comes the pressure for further growth; boards, shareholders and continued competitive strains (that may or may not have ties to our state) force some traditionally Vermont based employers to move aspects of their operations to states or countries with more advantageous tax policies and structures. Competitiveness out-places love of place.

Vermont’s answer has tended to focus on asking more from the same pools of employers. The situation is analogous to sugaring: either extract more from the same trees, or establish an environment in which more saplings can thrive, be tapped and foster the growth of future forests. If you unsustainably overtap the productive trees, eventually they will die; in the case of our successful entrepreneurs, they just pick up their roots and move to Florida and/or other places that aggressively seek investment and job growth.

With the challenge of the aging demographics that our state faces, it would seem to be a prudent moment in time to examine how we can encourage entrepreneurial Vermonters (both native and who come to our expansive college and university system) to stay in the state and generate employment. If we are unable to accomplish this goal, a shrinking tax base will be forced to shoulder the weight of increased state expenditure. No one wants to see a decrease in meaningful and supportive public expenditure, but relying on the same sources for revenue will only lead to a more dramatic budget challenge in the long run. This unsustainable approach to income generation for the state, coupled with other increased cost burdens shouldered by our employers (health care, unemployment insurance etc), will surely force the hands of some Vermonters to move their businesses, and the people they employ, out of Vermont.

The Blue Ribbon Tax Commission has begun its work to look at Vermont’s tax structure and our overall competitiveness. GBIC and LCRCC have organized business people and Vermont entrepreneurs to meet with the Commission and share some concerns and ideas about how to retain our quality of place while we seek to be a place where entrepreneurs can be globally competitive.

Vermont, like much of the country, is at a crossroads.  While the economic conflict that has engulfed many of the world’s economies seems to be ending and the painful process of rebuilding has begun, the need for actively preparing and delivering on actions to further our state has never been more fundamental to success.  At a time when planning appears to be the most difficult and divisive due to conflicts of theory and philosophy, it also holds the potential to unify and galvanize Vermonters’ needs and interests.  Recognizing this potential, GBIC has drafted “Common Ground,” a paper that examines areas of agreement between two of the most valuable and current reports in support of a unified economic plan.  Our hope is that Common Ground can be a part of the conversation that moves comprehensive economic planning in our state forward in a meaningful way.

The first report driving the content of Common Ground began its life at the state level; in 2006 the Vermont legislature set about defining a process for the development of an economic plan, and the Commission on the Future of Economic Development was formed.  With a public outreach process as the backbone of their research, the CFED condensed input from employers, stakeholders and public participants into a series of benchmarks and goals for analysis and action from state economists and legislators.

Nearly concurrently, in late 2007 the Vermont Council on Rural Development came to the realization that Vermonters were expressing concern about a lack of vision on a statewide level and proceeded to construct the Council on the Future of Vermont.  Charged with synthesizing the vision of what Vermont is and should be from the eyes of Vermonters, the CFV ultimately created both a vision for Vermont and a comprehensive analysis of who we are right now (“Vermont in Transition”).

GBIC has long been a proponent for the development of an economic plan that is definitive in its direction without being overbearing in its recommendations; independent in formation yet based on broad public input; measureable in success, but avoids setting goals without a means to reach them.  To this end, we have set about examining these two papers to find the clearest areas of overlap between leadership and public demand.  Rather than assessing the validity of individual recommendations, Common Ground identifies those areas of agreement between these reports; finding the areas where economic reality most clearly aligns with the vision Vermonters see as necessary to maintain the core values of our state.

For too long, we have lacked a successful unified and forward thinking economic vision and, as such, have come up short in developing a comprehensive economic plan. Part of the reason for this stems from disagreement between leaders and stakeholders. Common Ground seeks to avoid those areas of conflict by presenting the unified interests of these two reports.  By focusing not on solving disagreement, but by moving forward through areas of agreement, this document can act as a vital step in moving towards a valid, comprehensive and unified economic plan.

The Greater Burlington Industrial Corporation ~ GBIC is a non-profit economic development corporation serving Chittenden County, Vermont. GBIC was incorporated by 50 municipal officials, civic leaders from the Greater Burlington area and by an Act of the Vermont Legislature in 1954.

Since its founding, GBIC has served as a catalyst for economic opportunity in Chittenden County, assisting in the creation and retention of sustainable jobs and economic opportunities for thousands of Vermonters in the value-added industry sectors.